Saturday, October 17, 2015

Analysis of El.En.

Business: An Italian Laser producer. They are active with three different divisions: Medical (removing tattoos, hair, acne etc.), Industrial (for cutting in plastic, wood, metal etc.) and the third one is Conservation (to remove dirt from Art). They grow many times by company acquisitions.

Active: They are present in Europe, America and Asia in a few countries but sell their products globally.

P/E: 12.2

This company was analysed due to a request from Lorenzo posted on the Analysis Requests page.

The P/E is very good for El.En. with 12.2 and the P/B is also excellent with 1.4 which gives us a very clear buy from Graham. The earnings to sales are less impressive than what I would have thought since it is only 9% and the ROE is acceptable but also not more with 12%. The book to debt ratio is however great with 1.7.
In the last five years they have had a very poor yearly revenue growth since it is down at -1.1% which then gives us a motivated P/E of 8 to 10 which means that El.En. is a little bit overvalued on the market today.
They pay a small dividend of 2.4% which only correspond to 30% of their earnings so there is still room for improvement.

Conclusion: Graham says yes to El.En. but I am less impressed. It is a small company and their business has been contracting for the last couple of years. They own several smaller companies that all have their own homepage and their own products. Now I might be wrong but it felt as if the they did not have a global sales force but more local based on the products from those smaller individual companies that they acquired. The P/E, P/B, ROE and dividend are all ok but I see nothing spectacular in the company and I would need that to step into a small one like this. I like to take a look at the career page of companies and if they need to hire a lot then usually that is a good sign. This is what I got at El.En. "Al momento non ci sono posizioni aperte." which means that there are no current positions available.